Introducing Obama, DefaultReady, Loans.
And guess who will cover the default. That’s right, you the taxpayer, again.
Now would be a really good time to shift some of your 401k assets from stocks to cash. This could bring the whole house of cards down because this it is worse than the subprime junk Fannie was peddling on the eve of the 2008 crisis.
The Obama White House is rolling out a new low-income mortgage program, aimed at immigrants, that for the first time lets lenders qualify borrowers by counting income from nonborrowers living in the household. What could go wrong?
At least before the 2008 housing crisis, your income had to be your own. But now, as a renter, you can get a conventional home loan backed by Fannie by claiming other people’s income. That’s right: You can use your apartment roommate’s paycheck to augment your qualifying income. Or your abuela.
You can even claim the earnings of people who are not occupants, such as your parents, under this program.
You don’t have to bring much financial wherewithal to the table. You can even live in government-subsidized housing.
Just as long as you round up enough income-earners and pool finances to help meet the debt-to-income ratio.
You don’t need good credit either. You can qualify with a FICO credit score as low as 620, which is subprime. And you can put as little as 3% down.
It’s available for first-time homebuyers and repeat deadbeats. It will also expand to include refinancings.
It’s all part of a government campaign to ease access to home loans for Hispanic immigrants who tend to live in groups and pool finances.
Fannie says that 1 in 4 Hispanic households share dwellings — and finances — with extended families. It says this is a large “underserved” market.
The program actually targets properties “in high-minority census tracts.”
The National Association of Hispanic Real Estate Professionals, a liberal trade group, is praising the move, arguing it will bring tens of thousands of Hispanic families into the home market who have been “skipped over” by stingy (meaning prudent and responsible) lenders.
“It’s very encouraging,” NAHREP Chief Executive Gary Acosta said. “It demonstrates that Fannie has done a lot of work on the issue of identifying ways to qualify more people.”
Fannie and its regulators say, don’t worry — this new program won’t introduce any undue risk into the mortgage-finance system.
Gee, where have we heard that before?
Fact is, outside income is hard to verify and unstable. And low down payment and credit scores are the two most reliable indicators of default risk.
To assure such high-risk borrowers understand the importance of making their monthly mortgage payments, Fannie requires mortgage lenders to ask HomeReady applicants to take a four-hour online course on homeownership.
Well, there you go. Good as gold.